RedBull Company Profile SWOT Analysis

RED BULL GMBH IN SOFT DRINKS (WORLD)

April 2013

© Euromonitor International PASSPORT 2 SOFT DRINKS: RED BULL GMBH

Disclaimer

Much of the information in this

briefing is of a statistical nature and,

while every attempt has been made

to ensure accuracy and reliability,

Euromonitor International cannot be

held responsible for omissions or

errors.

Figures in tables and analyses are

calculated from unrounded data and

may not sum. Analyses found in the

briefings may not totally reflect the

companies’ opinions, reader

discretion is advised.

While Red Bull remains the

world leader in energy drinks, it

is facing growing competition

from other players. TCCC in

particular, with Monster in the

US and Burn in Brazil, is also

posing an increasing threat.

These two markets are emerging

as energy drinks battlegrounds

and the implications are

considerable for Red Bull’s

ability to remain the number one

ranked player.

Scope

This global profile focuses on the industry trends in soft drinks.

All values expressed in this report are retail/off-trade in US dollar terms using a fixed exchange rate (2012).

2012 figures are based on part-year estimates.

All forecast data are expressed in constant terms; inflationary effects are

discounted. Conversely, all historical data are expressed in current terms;

inflationary effects are taken into account.

Bottled Water

192 billion litres

Sports and Energy Drinks

15 billion litres

Concentrates

43 billion litres

SOFT DRINKS

OFF-TRADE RTD VOLUME

534.8 billion litres

Concentrates

43.7 billion

litres

Carbonates

169.5

billion litres

Fruit/Vegetable

Juice

62.0 billion

litres

RTD Tea

30.1 billion

litres

Bottled

Water

205.1 billion

litres

RTD Coffee

4.5 billion

litres

Sports and

Energy

Drinks

16.2 billion

litres

SCOPE OF THE REPORT

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STRATEGIC EVALUATION

COMPETITIVE POSITIONING

MARKET ASSESSMENT

CATEGORY AND GEOGRAPHIC

OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


The privately-owned Austrian

company Red Bull’s core business is

energy drinks. Dietrich Mateschitz

and Chaleo Yoovidhya each owned a

49% stake prior to 2012 when Mr

Yoovidhya passed away. Mr

Yoovidhya’s son Chalerm holds the

remaining 2%. While Mr Yoovidhya

was alive he acted as a silent

partner.

Red Bull has created the global

market for energy drinks, and the

pioneering Red Bull brand has

became synonymous with energy

drinks for a large number of

consumers. Red Bull remains bullish

and ambitious in their corporate

brand. Despite rising competition,

Red Bull continues to comfortably

lead the global energy drinks market

in both volume and value terms.

However, the threat from The Coca-

Cola Co (TCCC) has been mounting.

Red Bull GmbH

Headquarters: Fuschl am See, Austria

Regional involvement: Global

Category involvement: Carbonates, sports and

energy drinks

World soft drinks share by off-trade

RTD volume (2012): 0.2%

World soft drinks off-trade RTD volume

growth (2011-2012): 12.4%

Red Bull a pioneer in its category





Red Bull operates many other

businesses aside from energy

drinks The company owns and

manages a construction

company, football clubs, youth

academies and TV broadcasting

and recently online clothing

(Red Bull label only) sales.

Additional media products

include print magazines about

football, motor racing, celebrity

gossip and lifestyle. The

company has even ventured

into the mobile phone service

business in Austria, Hungary,

Switzerland and South Africa.

As a privately-held company,

financial information is limited

however the company reported

net sales of €4.9 billion in 2012

and 5.2 billion cans sold,

representing growth of 15.9%

and 12.8%, respectively.

Red Bull reported exceptionally strong net sales growth in South

Africa (+52%), Japan (+51%), Saudi Arabia (+38%), France (+21%),

the US (+17%) and Germany (+14%). Red Bull cited efficient cost

management and ongoing brand investment as underpinning its

growing profitability.

Red Bull continues to see strong net sales growth





STRENGTHS

OPPORTUNITIES

WEAKNESSES

THREATS

Red Bull has a broad

geographic presence,

which should ensure

positive long-term

growth even if certain

markets reach maturity.

Broad geographic

presence Red Bull has

established a strong,

consistent brand image

(an independent, edgy

brand) globally. Red Bull

is synonymous with

energy drinks in many

countries.

Category leader Controversial

The relatively high

caffeine content of Red

Bull makes the brand

highly vulnerable to

regulatory control.

Category limitations

Red Bull is building a new

production facility in Brazil

which is likely to make its

retail price more

competitive than imported

product prices. Building a

site in Asia should also be

considered.

New production

Emerging markets

represent newer

geographies for Red

Bull’s expansion.

Accelerating the

marketing and

sponsorships in these

markets is a wise move.

Emerging markets

Monster represents the

biggest threat to Red

Bull as it contains

natural ingredients,

which seem more

desirable than Red Bull

for some consumers.

Competition

Market maturity in

developed markets will

make marketing to its

core consumers harder

than in the past.

Constant communication

with consumers means

high marketing costs.

High marketing costs

SWOT: Red Bull GmbH


In overall soft drinks,

Red Bull has a limited

product portfolio

compared to the rising

number of rivals with a

plethora of flavour

variants and categories.




In 2013, Red Bull, for the first time in 15 years

added new products to its energy drinks range.

Edition is a range of three new flavours and thus

far available only in the US market. The likelihood

however is that this range will be rolled out to other

markets. The move is a response to growing

competition. Success for this launch will be crucial

to the company’s growth prospects in the mature

markets.

Red Bull has consistently maintained its premium

positioning from its slimline metal cans to its price

differential versus brands such as Monster. While

this strategy has reaped dividends in the mature

markets, it remains to be seen if it will sustain

growth in the emerging markets. Brazil with its

large population of lower-income consumers may

pose a challenge giving cheaper brands such as

TCCC’s Burn a competitive advantage.

Red Bull’s success has attracted considerable interest from soft drinks multinationals, TCCC and PepsiCo. TCCC in particular has been successful at leveraging its distribution network to launch Burn across many markets and to back Monster. Burn is a major threat to Red Bull in Brazil while in the US Monster has overtaken Red Bull in off-trade volume sales terms. Red Bull will need to find ways to hold onto its number one ranking globally in energy drinks and stave off this competition.

While health officials continue to voice concerns

over energy drinks and the category remains under

threat from stronger regulation, energy drinks has

seen relatively little impact in terms of sales. To

some extent this has added to the category’s

“edginess” attracting young consumers and

generating consumer interest. There is little risk of

Red Bull reformulating its product to cater to health

concerns and instead the company insists that its

products do not pose a health risk.

It is not easy at the top Red Bull stands up to health regulators

Will premium work in emerging markets? Red Bull breaks with tradition in 2013

Key strategic challenges and objectives






MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


Red Bull underperformed the overall energy drinks market in 2011-2012. While the company’s market

share of the energy drinks market in the US increased in 2012, the market’s growth rate overall began to

wane. Red Bull remains heavily dependent on the US for its global growth. Weakness here is reflected in

the company’s weakening global performance in volume terms. The company however continues to enjoy

the position of number one ranked player in energy drinks globally with a 21.4% market share.

In terms of absolute volume growth however, the US remained Red Bull’s key growth engine in 2011-2012

reflecting growth of 96% over 2007-2012. Brazil came second in terms of absolute volume growth

expanding by 608% over the review period or 48% CAGR. This market was a particular focus for Red Bull

with the company sponsoring various sporting events in order to raise the brand’s profile.

Red Bull performance wanes towards end of review period





In value terms, the company’s performance was stronger in recent years although even in value terms the

company’s performance fell below that of the energy drinks market overall. The energy drinks market has

attracted a number of other players including Monster Beverage Co, and The Coca-Cola Co (TCCC) which

marketed it own brands in the category including Burn as well as engaging in a distribution alliance with

Monster Beverage Co. PepsiCo had a modest presence in energy drinks with its brand Sting; however like

TCCC it maintained its own alliance, with Rockstar Inc.

Red Bull’s sister brand non-carbonated Red Bull remains owned by TC Pharmaceutical which led the

energy drinks category in China and was present in Thailand where it ranked second. TCCC’s Burn was a

stronger performer in Latin America over the review period, though Red Bull continued to lead the

category.

Red Bull faces mounting pressure





Soft Drinks: Global Top 10 Companies by Off-Trade RTD

Volume, Rank 2007-2012 and 2012 Share

Company

2007

2008

2009

2010

2011

2012

% company

share 2012

Coca-Cola Co,

The 1 1 1 1 1 1 21.2

PepsiCo Inc 2 2 2 2 2 2 9.9

Danone, Groupe 3 3 3 3 3 3 4.7

Nestlé SA 4 4 4 4 4 4 3.7

Mondelez

International, Inc - - - - - 5 2.0

Ting Hsin

International

Group

7 7 7 6 6 6 1.6

Dr Pepper

Snapple Group Inc - 6 6 7 7 7 1.5

Anheuser-Busch

InBev NV - 33 31 30 29 27 0.2

Red Bull GmbH 48 41 40 37 34 28 0.2

Otsuka Holdings

Co Ltd - 32 33 32 32 29 0.2

The only significant movement in rankings to

have taken place over 2007-2012 was the

split by Kraft into two separately traded

entities, which pushed Mondelez into the top

five based on its strong presence in

concentrates. In market share terms, TCCC

maintained a large gap between itself and

PepsiCo. Indeed, the gap between the two

widened slightly over the review period.

PepsiCo’s recent focus has been on the

development of its snacks business and on

developing a “better for you” range of

packaged foods, hence possibly neglecting

its soft drinks business.

TCCC has been active throughout the review

period moving beyond its core carbonates

base to fruit/vegetable juice, RTD tea, bottled

water and sports/energy drinks.

Red Bull as a premium player ranked much

farther down in RTD volume terms. The

brand is also heavily reliant on the impulse

rather than grocery channel thereby

discouraging multi-pack sizes.

Top 10 players in soft drinks by off-trade RTD volume share





Soft Drinks: Global Top 10 Companies by Off-Trade Value,

Rank 2007-2012 and 2012 Share

Company

2007

2008

2009

2010

2011

2012

% company

share 2012

Coca-Cola Co, The 1 1 1 1 1 1 26.2

PepsiCo Inc 2 2 2 2 2 2 11.3

Nestlé SA 3 3 3 3 3 3 2.8

Suntory Holdings Ltd 6 6 4 4 4 4 2.7

Dr Pepper Snapple

Group Inc - 5 5 5 5 5 2.0

Danone, Groupe 5 4 6 6 6 6 1.9

Red Bull GmbH 7 7 7 7 7 7 1.6

Asahi Group Holdings

Ltd - -

10

6

10

6 8 8 1.5

Kirin Holdings Co Ltd 8 8 8 8 9 9 1.4

Ting Hsin International

Group 16 13 12 10 10 10 1.2

Danone’s volume share is significantly

higher than its value share, due to its large

volume sales of low-priced bottled water in

emerging markets, notably Aqua (Asia

Pacific) and Bonafont (Latin America).

Meanwhile, Mondelez does not rank

among the top 10 in value terms due to its

reliance on the low-priced concentrates

category in RTD volume terms.

Red Bull GmbH however with its relatively

premium but small serving size Red Bull

brand ranks seventh in 2012. The

company’s narrow focus in soft drinks,

being almost exclusively based on energy

drinks, continues to keep the company out

of the top five in soft drinks.

TCCC and PepsiCo capture a stronger

share in value than in volume terms chiefly

due to their products, particularly

carbonates, being priced higher than local

brands and private label, benefiting from

strong brand equity and extensive

distribution networks.

Top 10 players in soft drinks by off-trade value share






MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


North America will continue to lead energy drinks in absolute volume growth terms over the forecast period. However, its CAGR of 8.1% over 2012-2017 represents a moderation from the 11.4% CAGR seen over 2007-2012. The Monster brand has led the market in the US over the review period in terms of absolute volume growth. Rockstar, due in large part to its alliance with PepsiCo, has also seen strong growth in this market.

Red Bull entered China in 2011, however Asia Pacific remains the company’s weakest region in terms of market share. However, this region will be exceeded only by North America in terms of absolute off-trade volume growth over 2012-2017 which may raise some concerns for Red Bull. After a period of strong market share gains in this region between 2007-2010 its performance began to moderate. TC Pharmaceutical with its non-carbonated version of Red Bull is the regional leader. Despite the close relationship between Red Bull GmbH and TC Pharmaceutical with the latter having been founded by the late Chaleo Yoovidhya, the companies remain separate entities.

North America will continue to drive sales in energy drinks

MARKET ASSESSMENT




In value terms, both Latin America and Asia Pacific gained in importance for Red Bull over the review

period. Latin American sales represented 12% of global value sales in 2012 while Asia Pacific made up

8%. In terms of growth prospects, the strongest growth will take place in North America where the market

for energy drinks will expand by US$4.1 billion over 2012-2017. In CAGR terms however, the strongest

performance will take place in Latin America which will see a 20% CAGR.

Red Bull is ranked number one in both markets. In Latin America, its market share remains a healthy

49.7%, however this represents a decline over 2007-2012 as the company faced strong competition from

TCCC whose share has risen from 2.5% in 2007 to 14.9% in 2012.

Growth in both Eastern and Western Europe will be a comparatively modest at 5% and 5.1% CAGRs,

respectively. However, these exceed the CAGRs for soft drinks overall in these regions, which will be only

2.7% and 0.5%, respectively.

The Americas to lead growth in energy drinks

MARKET ASSESSMENT





MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


Leading players in energy drinks by off-trade volume and value

CATEGORY AND GEOGRAPHIC OPPORTUNITIES




The rankings of the leading players in energy

drinks vary significantly by volume and value. Red

Bull commands a stronger market share in value

than in volume terms reflecting its relatively high

price points and reliance on the mature markets,

particularly the US, for its sales. The company

however maintained is leading position by both

measures in 2012 although in both cases it has

seen its market share plateau over 2007-2012.

The major winner over the review period was

Monster Beverage Co, which until 2012 was known

as Hansen Natural Corp. Underpinned by its

distribution agreement with TCCC the brand has

made rapid gains in both value and volume terms.

The brand’s success has been driven by its North

American performance where it generated 90% of

its volume sales in 2012.

In contrast GlaxoSmithKline (GSK) and its

Lucozade brand have been losing market share. In

volume terms, GSK has lost 2.4 percentage points

in market share over 2007-2012.

The Lucozade brand has faced strong competition in

its domestic UK market from Red Bull. In 2012, GSK

announced a strategic review of the Lucozade and

Ribena brands, which may lead to possible

divestment.

Red Bull has been constrained to some extent in

volume terms by its highly concentrated production

infrastructure. Up to 2012, the company produced

exclusively in Austria leading to high shipping and

production costs, which opened up the emerging

markets in particular to less expensive energy drinks

brands. In 2012, the company announced plans to

build its first factory abroad in Brazil which may help

improve its competitiveness.

Rockstar’s distribution agreement with PepsiCo did

not bring in the same share gains as the Monster

and TCCC alliance. Rockstar made few share gains

globally, with sales mainly coming from developed

Western markets where Red Bull continues to lead.

PepsiCo may have found it hard to drive Rockstar

sales in these mature markets in the face of TCCC’s

penetration and Red Bull’s dominance.

Red Bull shows some weakness in volume sales





Most dynamic energy drinks markets over forecast period





While the US will lead growth in energy drinks in

both volume and value terms over 2012-2017 there

are clear differences among the top 10 rankings by

both measures.

China will push ahead of Brazil in volume growth

terms. The market for energy drinks in China is

more mature than in Brazil. Unit price growth in

Brazil will as a consequence be higher than that in

China allowing it to take second position in terms of

value sales growth. In China, Red Bull’s sister

company TC Pharmaceutical with its Red Bull is

the overwhelming category leader with a market

share of 81.2% in off-trade volume terms in 2012.

Markets entering the top 10 in volume terms

include the Philippines and Vietnam both relatively

price-sensitive markets. Per capita consumption

however in both markets is higher than the global

average. Energy drinks in many Asian markets

have a long history of being consumed by truck

drivers and labourers as a temporary energy boost.

These products were in fact the original inspiration

for Red Bull; a Westernised version of the potent

drinks sold through by Thai pharmacists.

The UK ranks among the top five most dynamic

markets in both volume and value terms. While

Lucozade remains the leader here, its fortunes

have waned. Red Bull was responsible for much of

Lucozade’s market share loss in the early part of

the review period. However, later in the review

period, smaller brands are increasing

fragmentation. The UK is becoming increasingly

fragmented as newer and smaller players have

entered the market.

In 2013, Red Bull launched three new flavour

variants in the US market. This marks the first

major launch for the brand in the energy drinks

category over the review period. The new range

called Edition includes cranberry-, blueberry- and

lime- flavoured variants packaged in red, blue and

silver cans, respectively. The move may help to

invigorate consumer interest in key markets such

as the UK and the US where the range of energy

drinks options has increased considerably. It is

recommended that the range be rolled out to other

markets where market share has weakened.

Red Bull tries to counter weakness in key markets with new launch





Top US brands in energy drinks





Monster pulls ahead in volume sales Threat from consumer health

The Monster brand pulled ahead of Red Bull in the

US energy drinks market in 2009 in volume sales

terms but remains second to Red Bull in value

terms. Monster has achieved wider presence in

supermarket and forecourt retailers. TCCC has

leveraged its strong distribution network through

both channels thus giving Monster an edge in

terms of volume sales.

The Monster brand has also been supported by

sponsorship of high-adrenaline sports such as

MotoGP, NASCAR and Freestyle Motocross which

is a direct challenge to Red Bull, which also relies

on sponsorship of these sorts of events to maintain

consumer interest. Another reason behind the

disparity has been the fact that Red Bull sells

primarily in smaller 8.3oz cans, whereas Monster is

sold in larger 16oz cans at a relatively cheaper

price. Red Bull has since begun to offer its product

in a wider variety of sizes and in 2012 trumped

Monster with Red Bull Stratos, sponsoring Felix

Baumgartner’s free-fall from over 128,000 feet.

Both Monster and Red Bull have also been

challenged by the 5-Hour Energy brand from Living

Essentials, included in Euromonitor International’s

Consumer Health database as a tonic and bottled

nutritive drink. This product has been heavily

marketed on US television and offers a small pack

size (57ml) and the benefit of being sugar-free.

While Monster is targeted primarily at younger

male consumers, 5-Hour Energy is positioning

itself as a pick-me-up for office workers and

working mothers.

The addition of new flavours in 2013 will help to

reignite consumer interest. Red Bull’s success in

the US has been due in part to its success in the

on-trade which has helped to introduce the brand

into the off-trade. Educating consumers about how

the new flavours can be mixed with alcoholic drinks

in the on-trade should form part the marketing

campaign to launch the brand.

Red Bull and Monster look to high-adrenaline sports sponsorship





Leading players in Brazilian energy drinks





TCCC pushes Burn Localisation of production will help Red Bull

Strong growth in the Brazilian energy drinks

market has attracted a wider number of players,

many of whom have focused on the emergent C

socioeconomic class, launching energy drinks at

lower prices in 1-litre PET bottles. Examples

include BadBoy Power Drink from Horizonte and

Orbit from Bebidas Chiamulera. These moves have

helped to fuel growth overall in the category.

TCCC has made significant gains in the market

with its Burn brand investing significant resources

in marketing. Like Red Bull, TCCC has targeted

high-adrenaline sporting activities, announcing in

2012 its sponsorship of Kimi Raikkonen’s Lotus F1

team. The brand competes directly with Red Bull,

packaged similarly in a slimline metal can. Its price

points however are typically lower than those of

Red Bull giving it a stronger presence among

lower-income groups.

In 2012, Red Bull announced plans to begin

producing its energy drinks locally.

Localising production in such a key market is a

wise move for Red Bull. It also gives the company

stronger capacity more widely in Latin America

where the markets for energy drinks in Colombia

and Mexico are also set to see strong growth.

While Red Bull’s number one position remains safe

for the time being, reducing the price premium with

TCCC is recommended. This will be supported by

significantly reducing costs associated with

importing the product from Austria.

The entry of Anheuser-Busch InBev NV was a key

development in the market in 2011. By 2012, the

Fusion brand had managed to capture 0.2% of

sales in off-trade volume terms which, while

modest compared to the Red Bull brand at 19.8%,

indicates strong potential for further growth.

Marketing initiatives centred around the popular

Big Brother Brazil TV programme in 2012 helped to

increase awareness of the brand among young

people.

Red Bull vs Burn in Brazil





The relative weakness of Red Bull from Red Bull

GmbH in Asia Pacific is due in part to the strength

of sister brand Red Bull from TC Pharmaceutical. A

more cohesive international strategy should be

developed by both companies.

The strongest prospects for the two players is in

China, however opportunities are also being

missed in markets such as the Philippines,

Thailand and Indonesia. TC Pharmaceutical sales

here in energy drinks have been virtually flat over

the review period, as newer, more dynamic brands

such as Cobra from Asia Brewery and Sting from

PepsiCo in the Philippines have invested heavily in

marketing and advertising.

A decisive entry for Red Bull GmbH in key Asian

markets will be complicated by the presence of TC

Pharmaceutical’s Red Bull. However, both

companies could benefit from working more closely

together including on the production side to reduce

costs and widen their distribution network. The

sudden death of TC Pharmaceutical founder

Chaleo Yoovidhya in 2012 may present a

challenge however in ongoing collaboration.

Worlds apart: A tale of two Red Bulls






MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


Red Bull’s sales in 2012 remained dominated by

the US market. In most of its major markets the

company has managed to retain its number one

position in volume terms despite strong competition

from newer entrants. The US is an exception

where Monster owing to the strength of its alliance

with TCCC combined with an aggressive marketing

campaign has managed to topple Red Bull from

first place.

In value terms however, the company’s premium

positioning has meant its ranking has remained

more secure. As the dynamics of forecast demand

shift to emerging markets, where consumers

remain more price sensitive, this premium focus

will result in growing pressure on Red Bull’s market

share. TCCC and PepsiCo have emerged as the

company’s strongest competition whether indirectly

through distribution agreements such as TCCC/

Monster and PepsiCo/Rockstar and through their

own directly owned brands such as Burn and Sting,

respectively

Red Bull’s premium focus will result in pressure on market share

BRAND STRATEGY




Event and sports sponsorship have been key elements

for Red Bull’s marketing strategy for many years. Red

Bull’s eponymous brand has achieved remarkable

global success and 30-40% of its sales are re-invested

back in marketing and promotional activity. Red Bull’s

strategy has historically been a 3-pronged approach

incorporating buzz marketing, sponsorship and TV

advertising. Buzz marketing, including handing out free

samples at campuses and events where under 30s

gather, is often used as a way of initially raising

consumer awareness when entering new markets.

In 2012, the company took its marketing literally to an

entirely new level with the Stratos campaign which

featured Felix Baumgartner in a record- breaking

128,000 feet jump from the earth’s stratosphere,

making him the first man to break the speed of sound

while in freefall. The event was streamed live on line

with viewers able to log in to post comments via Twitter

and Facebook. Motorsports is another key focus for

the company with its own very successful F1 racing

team.

High octane sports drive home Red Bull message

BRAND STRATEGY




In a bid to stave off competition from rival brands, Red

Bull launched the Red Bull Edition range in 2013 in select

city markets in the US. The launch will likely be followed

by a nationwide roll-out later in the year. Despite pressure

from other energy drinks brands many of which have

launched additional flavours Red Bull has stayed loyal to

its original formulation and packaging.

The launch of cranberry, blueberry and lime Red Bull

variants is a major direction change for the brand, being its

first major launch over the review period. In order to

differentiate between Red Bull Edition and the original Red

Bull the new cans received a facelift with the addition of

new colours and a new bull design.

Red Bull has not as aggressively as other brands

launched into new packaging formats, remaining almost

exclusively with slimline metal cans. It has however in

some mature markets such as the UK launched into 1-litre

PET bottles. This reluctance is in part due to the

company’s strategy of retaining its premium positioning.

Red Bull tries to stay true to its roots

BRAND STRATEGY





MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


Expanded corporate operations

OPERATIONS

Red Bull GmbH

Red Bull Soft Drinks

Red Bull Energy Drinks

Red Bull Simply Cola, Carpe Diem

Other Businesses

Motor Racing, Media, MVNO, Fashion Online

Retailing




Red Bull is diversifying into other businesses, rather than limiting itself to energy drinks. In recent years, it

has been branching out and became a media company in its own right. The participation in sports

sponsorships and events connects the company with a global brand that has passion and excitement

associated with it. The company is also present in RTD tea and bottled water with the Carpe Diem brand

which it launched to target the health and wellness trend in soft drinks. Carpe Diem Kombucha is a

premium RTD tea sold in Western Europe. The brand is also in bottled water in Switzerland and Austria

using plant extracts and slight carbonation to offer a healthy alternative to carbonates.

The company owns two Formula One teams (Red Bull Racing, Scuderia Toro Rosso), a NASCAR racing

team as well as several football teams in Brazil, the US and Germany.

In South Africa, the company is partnering with Cell C to offer voice and broadband services as a mobile

virtual network operator (MVNO), ie a company that provides a mobile phone service but does not have its

own licensed frequency. Red Bull Mobile will be the second MVNO in the country, after Virgin Mobile.

It also sponsors many events - from cliff diving to air races - and subscribing to Red Bull Mobile is a way for

people who like the brand to access further benefits when they attend these events. These kinds of

partnerships between operators and consumer brands are common in Europe. In Germany, for example,

one operator, E-Plus, has 19 such partnerships. It is a way for these brands to get closer to their target

group.

The Group also includes Austrian TV station ServusTV, lifestyle and fashion magazines and a construction

company called Bull Bau.

Red Bull had 8,966 employees in 165 countries as of 2012. The company, which is not listed, traditionally

finances its investments from its cash flow.

Red Bull looks to diversification

OPERATIONS




Red Bull received approval from the Brazilian government to build its first production facility in the country

in early 2010. The company's initial investment in the project is expected to be around US$111 million. This

will also be the company's first production facility outside its home market, indicating a shift from a single

production site and the importance of the Latin American market to Red Bull.

The sustainability of its growth and strong position is questionable as the competitive environment

changes. While its products are present in more than 160 countries, most of its soft drinks sold around the

world come from one single site.

The company is known for combining the production of the can packaging material and filling at one site in

order to save on transportation time and costs. The key advantages of one single site include consolidated

management, an up-to-date inventory and energy savings. The main downside of a single production site is

perhaps the extra distance needed to ship all its finished goods to different parts of the world. Being unable

to produce locally to supply regional markets can make retail prices less competitive than those of local

products. In Brazil, Red Bull's retail price is 40% higher than that of Burn.

In 2011, the rumour that TCCC may look to fully acquire or partially acquire Monster surprised analysts and

should have alarmed Red Bull. If Monster were to be under TCCC's full control, their combined volume

sales would be very close to those of Red Bull and would certainly pose a threat to Red Bull's global

leadership. Although TCCC did not acquire Monster at that time, the possibility of an acquisition has not

been ruled out and the company was the subject of more takeover rumours in early 2013.

As Red Bull entered China in 2011, the company could also consider building a facility there to serve the

Asian market over the medium term. There are strong arguments for combining forces with sister company

TC Pharmaceutical to better penetrate Asia Pacific markets.

Red Bull expands production outside Austria for first time

OPERATIONS





MARKET ASSESSMENT


OPPORTUNITIES

BRAND STRATEGY

OPERATIONS

RECOMMENDATIONS


Monster and Burn will remain major threats. The

price differential between these brands should be

reduced. Red Bull can continue to position itself as

premium and maintain a price premium but in order

to gain better traction among younger consumers

and access to a wider demographic the company

should focus on driving volume growth particularly

in emerging markets or risk market share erosion

from TCCC-backed energy drink brands.

While this report does not cover on-trade sales,

popularity in this channel has a subsequent benefit

for off-trade retail sales. The launch of the Edition

range should be extended to the on-trade with a

marketing campaign to educate consumers about

how to mix the new flavours. Rolling out the range

to other markets where market share erosion has

taken place such as the UK is also recommended.

Establishing production in Brazil is a wise move for

Red Bull. Relinquishing to some degree its highly

centralised production model will help it to better

compete in the emerging markets. The move to

Brazilian production will also open up new

opportunities in the Americas. The Brazilian market

however is crucial to the company’s ambitions

given the level of growth expected to take place

here.

The failure of TC Pharmaceutical and Red Bull

GmbH to work together for a cohesive Asia Pacific

strategy will expose both players to competition

from Japanese brands and from US-based

multinationals such as TCCC and PepsiCo. The

Thai Red Bull brand has a long history in this

region and is suffering from waning consumer

interest in the face of new and exciting launches.

Red Bull GmbH’s opportunities will continue to be

limited for the time being as a result.

Brazilian production Work for benefit of both Red Bulls in Asia Pacific

Edition range Premium positioning

Holding onto top spot in energy drinks

RECOMMENDATIONS




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RedBull Company Profile SWOT Analysis

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